Verizon reported quarterly earnings that met analysts' expectations on Thursday, and revenue that topped estimates, as it added more phone customers than Wall Street's forecast.
Its stock price rose more than 2 percent in premarket trading.
How Verizon did in Q3
- Adjusted EPS: 98 cents a share, excluding items, matching the Thomson Reuters' consensus estimate.
- Revenue: $31.72 billion vs. $31.45 billion estimated by Thomson Reuters.
- Net adds: 603,000 (486,000 smartphones) vs. increase of 438,000 retail postpaid connections expected by StreetAccount.
By comparison, Verizon reported earnings of $1.01 a share on revenue of $30.94 billion in the year-earlier period. Verizon reported 442,000 retail postpaid net additions in third quarter 2016.
The company said Thursday the latest earnings reflect a 1 cent per share impact as a result of the hurricanes in Florida and Texas. It also said it offered services for the Northern California fires and for Puerto Rico after Hurricane Maria.
"I share the pride of all Verizon employees that our network aided and served first responders and customers when they needed it most following the recent natural disasters," CEO Lowell McAdam said in a statement.
McAdam said that Verizon still has the flexibility to raise dividends.
Verizon has looked to lure customers from the competition with unlimited data plans, as smartphone makers unveil their holiday-ready handsets. At the same time, the telecom company is moving deeper into advertising through its acquisition of Yahoo, a business that provides a sizable chunk of sales for the company.
Wireless business results
Cellphone service providers have seen expectations shift over the past few years. Phones used to be subsidized on two-year contracts, but most major American carriers have moved toward monthly payment plans as phone costs rise: The latest flagship phone from Apple, the iPhone X, is nearly $1,000.
Seventy-eight percent of Verizon's postpaid phone base has now transitioned to unsubsidized plans, the company said Thursday. But later product releases from Apple and Google might move more upgrades into the fourth quarter, executives said on the conference call.
"If you're paying $1,000 on a handset, you're going to want it to be on the best network," chief financial officer Matthew Ellis said.
Consumers have also come to expect more data, with streaming services like YouTube and Apple Music setting new records for viewership and listeners. That's created new challenges for carriers that have made money from data overage fees in the past.
Verizon launched Verizon Unlimited in mid-February, countering similar plans from T-Mobile and Sprint. The company said Thursday the unlimited plans have increased network usage of LTE, which now takes up over 50 percent of its available low- and mid-band spectrum.
There have also been ongoing reports of a potential tie-up between T-Mobile and Sprint, a proposition that would create a massive competitor for Verizon, although a deal between T-Mobile and Sprint has yet to materialize. The rumors come amid a wave of consolidation in both the telecom and media spaces.
Ellis said he's confident that Verizon has the right set of assets, regardless of what others do.
Media business results
Verizon has also expanded its media business, Oath, which now includes AOL, Huffington Post and Yahoo, as consumers move away from traditional cable packages and consume more content online. But the new advertising powerhouse has been fraught with reports of cybersecurity breaches: All 3 billion of Yahoo's accounts were hacked in a 2013 data theft.
The company said it lost a net of 18,000 Fios Video connections, mostly to over-the-top streaming services like Netflix during the quarter. Oath revenues were $2 billion during the quarter.
Ellis said that Verizon is continuing to work on a transaction for content and licensing, ahead of the potential launch of a Verizon-branded over-the-top live streaming service. Ellis also pointed out that Verizon's high-speed internet offering, Fios, gained customers during the quarter, and will continue to be more important as consumer stream more high-definition content.
"How and when we launch something is TBD," Ellis said. "I don't think your going to recognize the business five years from now, versus where it is today."
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